Intel's deal with Rockchip shows its willingness to take on ARM in the low-cost tablet market

Low-cost Android tablets from little-known vendors with 3G capabilities may soon hit shelves with chips from Intel, which is looking to replace ARM processors in devices starting at $100.

Intel on Tuesday struck a deal with Chinese chipmaker Rockchip to jointly make an Intel-based x86 Atom chip with an integrated 3G modem. The quad-core chip, based on Intel's Sofia architecture, will ship in the first half of 2015 and go into entry level tablets, said Intel CEO Brian Krzanich, during a conference call to discuss the deal.

Intel has been trying to woo tablet makers in China that have almost no brand recognition, but which ship large volumes of tablets worldwide. The Rockchip deal will provide Intel quick access to those tablet makers, which mostly use ARM-based processors. Rockchip already sells ARM processors, and will now add an x86 chip to its portfolio.

Walmart sells a FileMate Clear X2 7 tablet with a Rockchip chip for $109.99 to $129.99. Even low-cost tablets sold by some top vendors such as Hewlett-Packard and Lenovo use ARM-based chips from companies like MediaTek and Allwinner.

The Rockchip deal plunges Intel deeper into the low-cost tablet market, and analysts pegged the entry price point for such tablets starting at around or less than $100.

The chip could also go into smartphones, but that would depend on Rockchip and device makers, said Erik Reid, vice president in Mobile Communications Group at Intel. Reid did not say whether an LTE option would succeed the 3G radio in the custom chip.

A deal with Rockchip is a better way to reach out to Chinese tablet makers than building a internal sales team from scratch, said Dean McCarron, analyst at Mercury Research.

Intel will be able to sell more processors and possibly take market share away from ARM, whose processor designs go into most tablets, McCarron said.

"You've got Rockchip which is an ARM supplier delivering an Intel-based product," McCarron said. "This is the easiest and fastest way for Intel to access customers."

There is a lot of tablet development in China's Shenzhen area, and Intel now has access to that ecosystem, said Nathan Brookwood, principal analyst at Insight 64.

"Intel needs to show it's getting momentum in mobility. That's an important element for them," Brookwood said.

Rockchip already sells ARM processors at low prices, and tablet makers will accept Intel chips only if the price and performance story is compelling, analysts said. If the tablets are cheap, it's likely that Intel's chips will be competitive with ARM options, analysts said.

ARM takes all competition seriously, and Rockchip remains an important partner, ARM spokesman Phil Hughes said in an email.

"The ARM ecosystem continues to offer the most highly integrated and optimized portfolio of mobile system-on-chips across all price points and operating systems, as well as the most effective routes to market," Hughes said.

But a Rockchip deal is a sign that Intel is making headway into the tablet market, McCarron said. The company for decades had an internal organization to make and sell its chips, but now is willing to partner for faster growth in the mobile market.